Failed Suppliers - aren't they liable in contract for the price fixed and owe compensation?

Oxy1

Hi,

Typical scenario these days is that:
1. You are on a fixed price tariff with some months remaining. That is the contract is very valuable to you as you have locked a price which is well below the price you could obtain on a new contract elsewhere currently,
2. They go bust an expect that by doing so their liability to honor contacted extinguishes,
3. They claim that you owe them money and expect to be paid. (this applies to some customers)

Now the basics of the law of contract is that when you have contracted to sell something at a certain price you have to sell at that price even if market prices have increased. If you do not honor that obligation the other party can buy the item at the current, higher, price elsewhere and then sue you for the price difference putting them in the same situation they would have been had you honored the contract (apart from stress and time wasted that usually would not be compensated, at least adequately).

Is it different for energy companies?

I would imagine if for example:
1. You have a fixed price contract until July 2022 for electricity @10p per unit
2. You use 1000 units per month
3. Your supplier stops supplying on 31 December 2021 and you are switched to a supplier who charges 25p per unit.

Then your losses due to the bust supplier breaching the contract are: 6months   *   1000units per month * (25p -10p) = 6*1000*0.15=£900.

So if you are in debit to them - you just take that off your debt amount. If you are in credit  - you are less likely but would imagine you could still claim with the liquidators of the bust company  though will get less than that amount as in liquidation it is rare for creditors to be paid off in full.

Is there any specific legislation that overrides the usual law of contract to the detriment of customers of failed energy companies?

mclaren32

Who are you going to sue - there is no money to be had from these failed companies, why do you think they went bust in the first place??

emmajones1976

Bizarre thread. Compo from a bust company? 

victor2

Compensation culture from across the pond?

aoleks

if the company goes bankrupt, contracts become void. not sure who you'll sue for breach of contract

facade

We can all fund it, just stick another 25p on the standing charge for electric at the next cap

QrizB

Read the T&C of your energy contract. It will give a set of circumstances when each party can cancel it. One of those will be when the supplier loses their energy supply licence.

MWT

Oxy1 said:

Is there any specific legislation that overrides the usual law of contract to the detriment of customers of failed energy companies?

No, and none needed as per QrisB above, the T&Cs cover termination following loss of supply licence.

Oxy1

emmajones1976 said:

Bizarre thread. Compo from a bust company? 

Why reply if you did not read the thread and have little knowledge?  Some customers might be in debit (for example if used more energy than their supplier estimated when setting direct debits) in which case, if entitled, they could "get" compensation by offsetting it again the mount of debt!

In any case if your debtor goes bust it does not necessarily mean you will loose everything - you still might get some money back!

victor2

Oxy1 said:

emmajones1976 said:

Bizarre thread. Compo from a bust company? 

Why reply if you did not read the thread and have little knowledge?  Some customers might be in debit (for example if used more energy than their supplier estimated when setting direct debits) in which case, if entitled, they could "get" compensation by offsetting it again the mount of debt!

In any case if your debtor goes bust it does not necessarily mean you will loose everything - you still might get some money back!

Have you any idea how the Supplier of Last Resort process works?

Oxy1

victor2 said:

Compensation culture from across the pond?

Those with no knowledge of the law need not reply. The basic principle of contract law, allowing compensation for breach of contract, formed in England well before "across the pond" appeared as a player!